Eastleigh council needs £154m loan for housing project, leader says

Council leader Keith House said costs have risen on the development of 3,000 houses known as One Horton Heath

Rising costs mean a council needs to borrow £154.2m for an ongoing housing development, its leader has said.

Leader of Eastleigh Borough Council Keith House admitted the authority would owe more than £8,000 per household if the request for more money was granted.

He said costs had gone up on the development of 3,000 houses, known as One Horton Heath.

Mr House will make the request to councillors next week.

The council took over the development of the 310-acre site in 2018.

It said the latest funding request would go towards building 381 homes, a primary school and enabling infrastructure works at Horton Heath.

Overheads including staffing have risen from £13.8m to more than £40m, and a contingency to cover possible house price changes has more than doubled.

Analysis

By Peter Henley, BBC South Political Editor

When the man running the country stands up in Parliament and says you are a financial risk, that would normally be the kiss of death.

Prime Minister Rishi Sunak called out Lib Dem-run Eastleigh Borough Council's mounting debt at PMQs earlier this month, and he has sent in a team of independent accountants to comb through the books.

But their report is still awaited. And council leader Keith House is bullish about his financial health, saying long-term investments mean they have not had to cut services.

They have kept council tax low too, and local voters have kept re-electing Liberal Democrats for 20 years.

If you want to build council housing, they say, you have to spend council money. No-one would have batted an eye years ago, when Britain used to build much more.

But in these days of car crash council budgets like Birmingham and Slough, and with nearby Southampton begging Michael Gove for a loan, Eastleigh need some swagger to keep this financial show on the road.

How many local voters would happily lend them the £8,700 per household they are borrowing in their name?

Mr House said the scheme was behind schedule but would pay for itself in the long run.

He said: "This is the financial model that councils used to build council estates in the past.

"We're re-energising that model because it does put the proceeds back into the community.

"It does give you infrastructure first, it does give you a higher quality development and yes of course that means for a short period of time there is borrowing - but that's exactly the same as if anyone else was building a home."

The council took over the development of the 310-acre site in 2018

On some of the opposition to the plans, Mr House said: "There are always people who oppose development plans and I understand that.

"The benefit of putting the roads in first is that the construction traffic can use the new road rather than the local rural roads, which is what would happen on an ordinary development.

"So we're thinking about these things upfront."

Eastleigh has 56,900 households, an increase of 9% since 2011.

There are currently more than 2,300 families on its housing register, which is up from 1,800 in 2019/20.

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